Macy’s Inc. (M) – one of the leading department store retailers in the U.S. – hiked its share repurchase program by $1.5 billion, bringing the total authorization outstanding to $1.861 billion.
During the first-nine months of fiscal 2012, Macy’s bought back approximately 26.3 million shares aggregating $991 million. The company had share repurchase authorization worth approximately $361 million remaining at its disposal as of October 27, 2012.
Since the inception of the share repurchase program in August 2011, Macy’s repurchased 42.6 million shares for a total investment of $1.491 billion.
The company has been actively managing its cash flows, returning much of its free cash to shareholders via share repurchases and dividends, while maintaining a healthy balance sheet and credit ratios that are crucial for an investment-grade rating.
We appreciate Macy’s efforts to boost long-term shareholders’ value and believe that the recent announcement affirms the company’s positive outlook and reflects its confidence in its fundamentals. The share repurchases and strategies for increasing dividend not only enhance shareholders’ return but also raise the market value of the stock.
Further, Macy’s has been taking a number of initiatives in order to bolster its sales, profitability and cash flows. These steps include integration of operations, consolidation of divisions as well as developing e-commerce business and online order fulfillment centers.
We remain optimistic about the company’s customer-centric localization initiative called “My Macy’s.” The program aims at improving comparable-store sales and reducing operating expenses, with stores and merchandise assortments focusing on local customer needs and preferences.
Macy’s, which competes with J. C. Penney Company Inc. (JCP), Dillard’s Inc. (DDS) and Saks Incorporated (SKS), currently operates approximately 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico.
Currently, we have a long-term ‘Neutral’ recommendation on the stock. Moreover, Macy’s holds a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.
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